"Piercing the Corporate Veil"

This term describes a legal decision to remove the corporate protection provided to individual shareholders and directors thus making them liable for the corporation's debts and/or liabilities. By definition, a corporation is treated as a separate legal person, who is solely responsible for the debts it incurs and the sole beneficiary of the credit it is owed. This principle of separate personhood is one of the key elements to the benefits of forming a corporation. To maintain the separate identity status and its protections, the corporation must adhere to the corporate governance procedures set forth in its by-laws and through required activities such as filing annual reports, paying applicable taxes, conducting board of director and shareholder meetings and documenting those in properly adopted resolutions and corporate minutes. Failure to perform these corporate duties could result in a court "piercing the corporate veil".

Depository glossary and terms by letter

A B C D E F G H I J K L M N O P Q R S T U V W X Y Z 0

Was this page helpful? Yes: 0 No: 0 4